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Plastics pricing: Asian propylene prices leap higher on plant shutdowns


In Asia, spot prices for propylene went up sharply during the past week as prices gained $60/ton on an FOB Korea basis. Coupled with other recent jumps, the price has risen in the triple digits in dollar terms—about $125 per ton—since the beginning of February.


This pricing update is according to ChemOrbis (Istanbul, Turkey), which shared its findings with PlasticsToday. Why the sharp increases? Planned plant shutdowns are partly to blame, as well as unplanned shutdowns. The result of both has been spot propylene prices that are at heir highest level since September 2008.
 
One unplanned shutdown was Yeochun NCC’s steam cracker in South Korea, with 485,000-tons/yr capacity, which was shut due to a power failure early last week. The company had originally planned to restart the cracker on Feb. 24 but had to pass due to furnace damage, according to ChemOrbis. The pricing service has heard that the company is planning to restart the cracker partly over the weekend, but the operating rates will remain around 60% of capacity.

Meanwhile, CPC is planning to shut down its No. 4 line (193,000 tons/yr of propylene capacity) in Taiwan due to mechanical issues. Guangzhou Petrochemical’s 220,000-tons/yr cracker was shut on February 14 for 30-40 days. Formosa had halted its operations at its 270,000-tons/yr propylene plant in Taiwan in January for a month-long maintenance effort. LG Chem will conduct maintenance on March 17 at its 390,000-tons/yr propylene plant. The company expects to lose 32,500 tons of propylene during the shutdown but plans to raise its capacity to 450,000 tons/yr after the maintenance.

Idemitsu Kosan’s 224,000-tons/yr propylene plant in Chiba, Japan will be shut for maintenance March 27-May 18. Formosa’s 375,000-tons/yr propylene plant in Taiwan will also be shut between March 13-April 27 as part of a planned shutdown. 
 
If all of these shutdowns were not bullish enough to support a rise in PP prices, adding to PP processors’ pain has been the rise in oil costs, triggered by the political unrest in oil-producing countries, with higher oil prices supporting the higher propylene ones, too.

Some suppliers importing PP to China already announced their March PP offers. A Middle Eastern producer elected to issue $90/ton increases on its PP raffia and injection grade prices while lifting its PP block copolymer prices by $70/ton over February rates. According to ChemOrbis, a South Korean supplier issued $50-70/ton increases on PP block copolymer for March, pointing to its limited supplies and higher production costs. The seller reported conceding to only $10/ton discounts on done deals. A different South Korean supplier’s March selling offer for PP block copolymer stands a full $90/ton above its February done-deal level.

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